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COUNTRY INSIGHTS

The BoI sounds rather optimistic; no further accommodation likely
ISRAEL · In Brief · 01 Nov 2020

Highlights: Economic indicators point to a gradual recovery The weekly credit card purchases have increased by 20% in the past two weeks (through 28.10) as the economy has opened up. The Google Mobility Index to the workplace has rebounded to close to pre-second-closure levels. Hi-tech service ex...

Monetary decision disappoints the markets
ISRAEL · Report · 26 Oct 2020

Markets were somewhat disappointed by the minor adjustments made in monetary policy last week. Economic indicators point to a sharp deceleration since the second lockdown, although manufacturing exports expanded. Moody’s decided to postpone a rating report on Israel, most likely until the fiscal ...

Monetary decision disappoints the markets
ISRAEL · In Brief · 25 Oct 2020

Rates remained unchanged with little additional accommodation. Policy rates remain at 0.1%, Governor Yaron expressed little inclination to go to zero or negative. The bond purchasing framework was expanded by 35bn ILS, but the pace of monthly purchases is not expected to accelerate. LTRO’s will b...

Rates remain unchanged while further accommodation disappoints
ISRAEL · In Brief · 23 Oct 2020

The Bank of Israel announced yesterday that policy rates will remain unchanged at a level of 0.1% as widely expected in the market, although several economists (myself included) envisioned the likelihood of a rate cut to zero.The additional accommodative measures were rather weak in scope. An add...

The recession and deflation support further accommodation
ISRAEL · Report · 19 Oct 2020 · 1 response

The deflationary environment persists, with core inflation down -0.4% y/y in September. Economic indicators point to a sharp deceleration of activity due to the second shutdown. Further monetary accommodation is expected from the Bank of Israel on Thursday. A negative sovereign rating outlook for...

The recession and deflation support further accommodation
ISRAEL · In Brief · 18 Oct 2020

Highlights:Inflation in September declined by -0.1% m/m and -0.7% y/y. Core inflation reached -0.4% y/y following -0.5% in August. Eight out of the ten major CPI items were zero or negative y/y. The PPI (excluding energy) declined by 1.9% y/y. Deflation in Israel is due to the steady shekel appre...

September’s CPI comes in as expected, supportive of monetary accomodation
ISRAEL · In Brief · 15 Oct 2020

Inflation in September declined by 0.1% m/m and declined by -0.7% y/y (following -0.8% in August), coming in according to expectations (market and ours), although several local forecasters expected zero m/m.Core inflation (the CPI excluding energy and fresh produce) inched slightly higher to -0.4...

We expect the fiscal deficit to reach 12% GDP this year, debt/GDP: 74%
ISRAEL · In Brief · 13 Oct 2020

In September, the fiscal deficit reached 14.9bn ILS compared to 1.9bn in September of last year. The deficit/GDP ratio in the LTM reached 9.1%, from 8.1% last month and 3.7% in 2019.In the first nine months of the year, non-Covid related expenditure increased by only 0.9% y/y, while Covid related...

The lack of a coherent fiscal policy could support a negative rating outlook
ISRAEL · Report · 12 Oct 2020

• The Director General of the MoF, Karen Turner, announced her resignation yesterday, five months after her appointment • The lack of a coherent fiscal policy and a general political instability could support a negative rating outlook. • Economic growth continues to suffer from the second closu...

The lack of a coherent fiscal policy could support a negative rating outlook
ISRAEL · In Brief · 11 Oct 2020

Politics: The Director General of the MoF, Karen Turner, announced her resignation yesterday, five months after her appointment. She follows in the footsteps of the Director of the Budget and the General Accountant of the MoF. The professional team of the MoF is greatly troubled by the lack of an...

A more prolonged closure supports further accommodation
ISRAEL · Report · 05 Oct 2020

Recent economic indicators, such as weekly credit card purchases and Google mobility, point to economic contraction since the renewed lockdown. The government is leaning towards a more prolonged closure, with a gradual re-opening of activity. Economic deterioration and a more prolonged closure su...

A more prolonged closure supports further accommodation
ISRAEL · In Brief · 04 Oct 2020

Highlights of the weekly Israeli macro wrap up:Recent economic indicators reflect growth deterioration:Credit card purchases declined sharply since mid-September (through end-month), especially for tourism, restaurants, leisure, and clothing/furniture/electronics, due to the renewed closure.The G...

The MPC will be considering further accommodation
ISRAEL · Report · 28 Sep 2020

The economy is expected to decelerate significantly due to the renewed lockdown. Officially, this lockdown will last for 10 more days, but much will depend upon the level of infections. Hi-tech service exports continued to expand despite the Covid crisis; it is a sector that can easily shift work...

The MPC will be considering further accommodation
ISRAEL · In Brief · 28 Sep 2020

Highlights of the weekly Israeli macro wrap up:Monetary policy: The next rate decision is still far away (22.10) but the MPC will be meeting before then to discuss monetary policy. We doubt the MPC will be satisfied with a “hold” decision with no shift in policy. Both weaker growth (due to the re...

Deflation and renewed closure likely to support further loosening
ISRAEL · Report · 21 Sep 2020

Inflation in August surprised on the downside, with core inflation moving deeper into negative territory (-0.5% y/y). Despite recent indicators of growth acceleration, the renewed closure will clearly reverse this trend. The combination of slowing growth and pronounced deflation support a more ac...

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